Manufacturing orders holding up - CBI

Manufacturers are reporting healthy order books and expectations for output growth are above their long-run average, according to the Confederation of British Industry (CBI).

The CBI said pricing pressures have also eased following strong inflation during the first two quarters of this year. The report comes just weeks after figures from the Office for National Statistics (ONS) revealed an unexpected slump in manufacturing output in June.

Of the 510 manufacturers responding to the CBI's August monthly 'Industrial Trends Survey', 29 per cent of companies described total orders as above normal, and 29 per cent said they were below.

A total of 24 per cent of companies said export order books were above normal but 24 per cent also said they were below normal. The resulting balance of 0 per cent compares with -8 per cent in July.

Expectations for growth in factory output over the coming quarter also rose with 31 per cent of companies predicting production will rise in the next three months and 17 per cent anticipate that it will fall.

Richard Woolhouse, CBI head of fiscal policy, said: "Manufacturing order books are holding up, and expectations for output growth are above their historical average, although they are less strong than earlier this year.

"Inflationary pressures have eased since the start of the year, with fewer firms predicting they will have to raise prices at the factory gate over the coming quarter.

"But the risks to manufacturing activity and business confidence have if anything increased, due to market volatility and the recalibration of growth expectations worldwide. Concerns around growth in the US and the Euro area present further challenges to the manufacturing recovery."

Earlier this month, ONS revealed that British factory output, which does not include utilities or oil and gas extraction, fell by 0.4 per cent in June. Car production suffered the biggest fall, of 1.7 per cent, while chemicals, and paper and publishing also shrank.